Rightside rejects ‘opportunistic attempt’ by Donuts to acquire domain registry business for $70M

Rightside Group of Kirkland, Wash., this morning rejected a public bid by Bellevue, Wash.-based Donuts to acquire its registry of domain names for $70 million, and said it will not consider the proposal further.

Rightside said in a press release that its board of directors and its independent legal and financial advisors considered the “unsolicited” offer before deciding against it.

Donuts representatives told GeekWire last month that they went public with the offer because they felt Rightside hadn’t given it fair consideration. Donuts wanted to compel Rightside to come to the table and talk about the proposal.

“After thoughtful evaluation, Rightside’s Board has determined that Donuts’ proposal significantly undervalues Rightside’s Registry assets,” Taryn Naidu, CEO of Rightside, said in a statement. “We believe Donuts’ proposal is an opportunistic attempt to acquire Rightside’s valuable portfolio of domain extensions with an undervalued price and in a manner that would not be in the best interests of Rightside shareholders.”

Rightside also sent a letter to Donuts, saying it “doesn’t believe any further discussion is warranted on this proposal.”

Donuts representatives did not immediately respond to a request for comment this morning.

Publicly traded Rightside has both registry and registrar businesses. Its registry owns domain name extensions — also known as top-level domains — such as .band, .dance and .sale. The registrar sells specific domain names to the public.

Privately held and heavily funded Donuts owns close to 200 domain name extensions, including .movie, .LTD, .agency, .email, .school and .group.

Rightside said its registry business is key to its long-term success. On a first quarter earnings call, Rightside officials said the company is targeting $50 million to $75 million in annual revenue from the domain business over the next three-to-five years.

Donuts co-founder and CEO Paul Stahura originally founded eNom, Rightside’s registrar business, before selling it to Demand Media in 2006. Rightside was spun off from Demand Media as a public company in 2013, and Stahura says he remains a shareholder in Rightside.

Stahura previously told GeekWire that Rightside’s registry and registrar arms conflict with each other, not giving shareholders of the public company the best possible value. He said Donuts’ proposal would be a better deal for shareholders.

Nat Levy is a staff reporter at Geekwire covering a variety of technology topics, including Microsoft, Amazon, tech startups, and the intersection of technology with real estate, courts and government. Contact him at nat@geekwire.com and follow him on Twitter at @natjlevy.